I don’t think capitalism is necessarily at fault, nor must the working/middle classes be struggling for fascism to emerge. If anything, quite the opposite. It is the better off countries that end up turning fascist. All fascist countries are/were first world countries, in various states of advanced development.
That’s not right, at least not for the fascist regimes in Europe that emerged prior to WW2. The countries where it happened (specifically Germany/Italy/Spain) had all seen civil unrest or even civil war in the recent past, they were hit hard by the global financial crisis in the twenties and had high unemployment and widespread poverty. This was the very thing the fascists used to ingratiate themselves to the public at large, by creating jobs through massive public building and rearmament projects.
By the way “first world countries” is post-WW2 terminology and didn’t originally have a connotation of superior economic status, but was referring strictly to ideological alignment. Whether a country belonged to the capitalist/communist/unaligned block in international politics during the cold war.
Both of these options have their pros and cons, and I think it is important to explain these well to the council if you want to have any hope of convincing them.
A line of argument that has had some success in Europe is what has become known as “Digital Sovereignty”, basically a fancy term for saying government should control its own infrastructure. So you might want to sell it as an easy way to have a permanent archive of public communication and a method for it that is under their direct control, rather than as a way to find more engagement.
As others have said self hosting has a maintenance and moderation overhead, but this can be lessened by running an instance together with other cities while still retaining most of the benefits of self hosting.
Seeing from the linked cross-post that this is about Port Alberni, and considering that http://portalberni.ca/ returns an empty reply while https://portalberni.ca/ lets me know I have been geoblocked because I’m outside of Canada and the US, I’d say you have an uphill battle before you though. These people made a website (probably paid for it, too), and then killed much of its use by geoblocking most of the world.
Good luck.