An annual fund is made up of donations that keep a nonprofit running on a day-to-day basis. It can cover anything from office supplies to general operational expenses.
Since nonprofits have no other way to bring in the money to cover these costs, they are often covered by the money raised during the course of the year.
Because a large part of a nonprofit’s revenue is generated via their online donation page, it is inextricably linked to the annual fund. The two can’t really be separated.
You don’t need to detail every single component of your nonprofit that an online donation will go toward, but it is helpful to give donors a good idea of what their contributions will be supporting, including your operational expenses!