"Many in the civil rights community have become disheartened, frustrated and angry after years of engagement where they implored the company to do more to advance equality and fight discrimination, while also safeguarding free expression," the auditors write in the report released on Wednesday.
Facebook commissioned the audit in 2018 as part of its response to a range of criticism over issues such as data privacy, voter suppression, incitement of violence and a lack of transparency in political advertising.
The audit was led by Laura Murphy, a former director of the American Civil Liberties Union's legislative office.
The company had not immediately indicated specific steps it would take in response to the findings but issued a statement attributed to chief operating officer Sheryl Sandberg describing the audit as a "really important process for our company".
"Facebook stands firmly against hate," Ms Sandberg said.
"What has become increasingly clear is that we have a long way to go," she said.
The auditors said Facebook had been too willing to exempt politicians from its rules, letting some spread misinformation, harmful and divisive rhetoric and even calls to violence.
Facebook has taken a hands-off approach to political speech compared with rivals, notably leaving untouched posts by Mr Trump in recent weeks that were flagged by its rival Twitter for falsehoods and incitement of violence.
Organisers of the advertising boycott met for more than an hour via video conference with Facebook chief executive Mark Zuckerberg and Ms Sandberg on Tuesday.
After the meeting, activists said they saw "no commitment to action" from the company.