Unpopular opinion: I'm fine with ads as a form for instances to sustain them selves.
As long there are no invasive data collection and such, I really wouldn't mind having some ads if that means making instances having more resources to grow and sustain them selves.
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I am not fine with that. This should be community driven and not ad driven.
Server space or electricity wise, running an instance will never be free, and it will be more and more expensive as more and more successful Lemmy becomes.
Donations and such will only get Lemmy so far.
As someone else pointed out: according to Apollo dev Reddit gets at absolute most 12 cents per user per month from ads. Without data collection the ads would be far less profitable, so I'd say that donating 1 dollar a YEAR would actually result in more revenue for the maintainers than ads.
Most instance admins aren't here for profit. I'm hosting mine on dedicated hardware I already pay for, so it's zero added cost, even if I have to scale up a good bit. And if my instance grows too much for its bare metal server, I'll port it to a Helm chart and migrate to my production k8s cluster. Anything to avoid ads!
The Mastodon servers do it and I am sure Lemmy can do it as well. It also helps spread people to more servers.