It's interesting that one of your criticisms is that the Internet Archive is too lawsuit-averse - that it takes things down, after requests from apparent rightsholders, too quickly & opaquely. But your other criticism is that the Archive hasn't been lawsuit-averse enough - that during a once-in-a-century emergency with the nations' libraries closed, they took too much of a risk in offering extra digitized book loans, against the wishes of rightsholders.

As a former Internet Archive employee, but not speaking for them here:

That's inconsistent. If the Archive were as meek about deferring to traditional-rightsholder supremacy as you want with regard to the "Emergency Library" of digital books, the web archive might not exist at all, or could only include material with explicit prior permissions – shrinking it to a tiny fraction of its size.

When the Archive started crawling & storing websites, there was no clear legal right to do so. (The 1996 DMCA, which if read a certain way, immunizes some such activities as "caching", wasn't even law when the IA started in 1995 - but its immunity also requires the prompt retroactive removals you find objectionable!)

There was, from the start, a colorable argument, based on 'fair use' & the historical role & respect given libraries by our law & culture, that this should be legal, and could be legal if the facts were interpreted a certain way.

But on the letter-of-the-law, there was an immense risk rightsholders could sue - like the publishers have now with regard to pandemic book-lending.

It was only by demonstrating the immense value of such an archive, & repeatedly making the case for its legitimacy via such demonstration and reasoning in courts & legislatures & culture, that the right of such an archive to exist has now been firmly established. The fact that lawyers & courts themselves have found it so essential has been part of the success. And, now that it is a familiar activity, it continues to gain reinforcement by being assumed-as-legitimate when new laws/policies are drafted, because those now avoid language that could be inadvertently interpreted to prohibit something obviously good & existing.

Still, having an automated exclusion procedure (via 'robots.txt'), and generally respecting credible rightsholder takedown requests, is essential to capping the legal risks of such a large archive.

And the Archive's approach on book-lending, including during the "Emergency Library" program, has been broadly similar. An urgent need & technological opportunity arose before laws & explicit "ask first" processes could accommodate the situation. Culture & precedent suggested extraordinary, but temporary, adaptation could plausibly be legal & would be net-beneficial for society. (Which is better: no access to library-loaned physical books while in 'lockdown', or tracked time-limited access to temporarily-created digital copies, smaller-in-number than the count locked in closed libraries? Does technological format-shifting in response to an emergency, with minimal impact on rightsholders' revenues, fit 'fair use'?)

Still, the legal risks were capped by setting the program to be of limited duration, & having a policy of respecting any explicit book-exclusion requests from rightsholders.

If you're really so afraid of rightsholder damages judgements, sure, the Archive isn't your best donation target. (I think the risks to the Internet Archive from the latest lawsuit are limited to having a bad precedent established, not bankruptcy.) But know that every historical website you can access is there because the Archive was willing to take some risks establishing new rights/precedents, & your preferred policy of fewer-exclusions would mean yet more legal risks. And lots of people donate to good causes specifically so that they can defend themselves, legally, or push new cases, legally, for broader benefits.