Almost 5 years ago, the ex-CTO of Mozilla blogged this:
https://andreasgal.com/2017/05/25/chrome-won/...and apparently, the conclusions still haven't landed. Firefox lost because it has no reach. They lost on mobile and they don't have billion user properties to push their browser in the way Google has.
Any and all discussions about Firefox UI choices, its engine, whatever...are completely irrelevant if you have near zero reach. This problem cannot be solved with engineering. Nor will it be solved with donations.
Firefox lost and lost a long time ago. It's over. It cannot compete with these market forces. The world in which Firefox was successful, before smartphones, massive online services and a stagnant IE, no longer exist.
With this in mind, what should happen to Firefox? Short term to mid term, keeping it alive and hoping Google keeps wiring Mozilla tons of money, because without it, Mozilla would soon cease to exist.
Long term? I don't know. I would hope that the technical product somehow can be preserved and kept functional, but maintaining a browser is a costly business. It's not the type of project to send to Github and say "best of luck".
The common narrative in the web community that having an extra independent browser engine around is great is mostly a "feel good" story. Having a slightly crappier engine does nothing for developers or users. Firefox also doesn't keep the web "honest" as it's so small now that it can be ignored entirely. There's a reason both Edge and Brave picked Chromium.
As for Mozilla, I have little confidence in their ability to reinvent themselves, with or without Firefox. One of their ex-employees expressed it well on Twitter: they got addicted to a fire-hose of free money which they largely pissed away on fruitless projects.
As counter point to that I would say that besides failed projects, Mozilla has made very meaningful contributions to foundational computing, think Rust and WebAssembly. It's extra painful that in particular the most useful part of Mozilla, the above, is scaled down.
Mozilla these days comes across as a woke blog. Preachy, deeply political, yet without actual impact. I follow the simple rule in life where if somebody is constantly telling you how virtuous they are, they are the opposite. Because good people don't need to tell the world that they're good. "Progressive" Mozilla is quite the fan of neoliberal economics, as they fire a huge amount of workers (even during COVID) whilst enriching themselves as reward for...running the company in the ground. They are THE privacy browser (nope) and build an advanced container to castrate Facebook, yet don't do the same for Google services (for well known reasons). It's all very hypocritical and hollow.
Preaching is not only tiresome, it also doesn't pay bills. So go an do something useful in establishing "revenue earning products". A bookmarking service and a rebranded VPN fail to impress.