Sure we could spend all our donations levelling up but what I have found is that membership does not rise accordingly. It’s better to level up only when the alliance is full of good members - in other words slowly. Not much point having forty slots open and only fifteen active members.
You are suggesting that Flare wants us to spend every cent increasing the size of the alliance but never winning because we’d have no gold for boosts. Surely Flare want us to enjoy a fair challenge rather than always losing?
I don’t think it is hard to code matchmaker so that it puts alliances of the same level together. It could even be a small range of levels to avoid wars short of alliances.
Alternatively they could apply the level matching for alliances with few fiefdoms and then solely by fiefdom once you get above say 50 fiefdoms.