Open license software will never beat paid software in the consumer space. I know that’s a controversial opinion, but it’s been proven a thousand times. There’s no way to beat the user experience of Reddit when they have a hundred experienced UX designers doing nothing but optimising for engagement. We think the overall experience is worse, which is why we’re here, but we are the minority. Lemmy still hasn’t figured out basic problems like what happens to the user experience when an instance defederates from another. The user had no control over that, but suddenly their subscribed communities have disappeared without notice or explanation. Now they have to find another instance to subscribe to, and they lose their entire Lemmy identity.
Wikipedia is a good example but they actually employ designers and developers. I think the secret sauce is paying people to build great software. So a non-profit with donations could absolutely work.