I think the problem is that the Matrix Foundation (non-profit org) is being slowly cannibalized by Element (for-profit, VC-funded) which ends up making their costs and profit expectations a lot higher.

Right now this is only impacting the matrix.org homeserver. However, this could eventually end up impacting protocol-level design choices that harm other instances as well. Sure, you could fork the protocol and clients, but now we’re talking about taking up the work that an entire organization had previously been doing. Not impossible if and existing organization like the FSF or Linux Foundation started backing something, but not a great place to be in either.