The US-based group launched its "Initiative for Civil Courage Online" in Berlin, pledging over EUR 1 million (roughly Rs. 7 crores) to support non-governmental organisations in their efforts to counter racist and xenophobic posts.
Facebook Chief Operating Officer Sheryl Sandberg said hate speech "has no place in our society", including in the Internet.
Facebook's ground rules forbid bullying, harassment and threatening language, but critics say it does not enforce them properly.
On Friday, the firm said it had hired a unit of the publisher Bertelsmann to monitor and delete racist posts on its platform in Germany.
In November, prosecutors in Hamburg launched an investigation into Facebook on suspicion of not doing enough to prevent the dissemination of hate speech.
Top German politicians and celebrities have voiced concern about the rise of anti-foreigner comments on Facebook and other social media as the country struggles to cope with a tide of new migrants that amounted to 1.1 million last year alone.
Chancellor Angela Merkel has urged Facebook to do more, and the Justice Ministry set up a task force with Facebook and other social networks and Internet service providers with the aim of identifying criminal posts more quickly and taking them down.
© Thomson Reuters 2016
For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.