Alongside official charities, grass-root NGOs are also trying to open up their financial affairs. But lack of legislation is forcing the industry to rely on self-regulation, making it difficult to earn public trust. Some civilian charities are calling for new laws.

China-Dolls are not lavish with their spending.

During the past 3 years, this grass roots NGO has been helping to educate children with brittle bone disease, as well as arranging therapy and medical funding.

Huang Rufang, Founder of China-dolls center for rare disorders said, "We receive donations mostly from individuals - small amounts from 10 to 1,000 Yuan. We send out emails to each and every donor, no matter how small, telling them where their money is being spent. Since our establishment, we've published monthly, half yearly, and annual funding reports on our website. As of this year, we're publicizing our detailed earning and spending reports."

Recent public skepticism towards charity foundations has affected the industry's credibility. Huang Rufang says convincing the public to donate is becoming difficult.

Huang Rufang said, "The biggest problem comes from people's lack of knowledge. For example, very often, potential donors call us and ask whether we're volunteers or paid staff? I say we're paid staff. Then they decide not to give their money."

Huang Rufang says he and his colleagues are hoping for new regulations to end public misunderstanding of charity organizations. Huang says it must be seen as a profession, not a passion.

Tough regulations will help earn public trust, as well as attracting more people to work for charities.

Huang Rufang said, "Sometimes I'm embarrassed to tell my former classmates I work for a charity. I think any potential regulations should protect the legitimate status of those working in the sector. It should regulate the industry, and standardize and equalize the role of official and civilian charities. All information should be transparent."

There has been strong public desire to pass a charity law ever since the 2008 Sichuan earthquake, during which time some of the biggest charity foundations failed to reach Chinese people's expectations. But 3 years on, though a draft of the legislation has been finished, the law remains near the bottom of the agenda of the state council. Without such legislation, charitable NGOs, especially grass-root foundations are vulnerable to public accusations. Both governmental and non-governmental organizations rely heavily on self-regulation.

Former head of the government's charity department Wang Zhenyao says the situation is urgent and reaching breaking point. "Recent incidents are holding back other foundations from developing, and are fueling social instability. The State Council should be more serious on this issue. Public and the media should push harder to urge the State Council to submit a draft at the National People's congress. I think with these efforts, a law could be passed quickly."

2008, the year of the Sichuan Earthquake is widely referred to as "Year One" for China's Charity Sector. Since then, China's charity giving has rocketed, peaking in 2010 at 70 billion Yuan. Meanwhile, a 2009 draft law to regulate this multi-billion dollar sector has yet to be passed.