The latest report on philanthropy in China released by the Chinese Academy of Social Sciences shows that our people are compassionate and willing to donate to help the needy.

The country collected donations of 70 billion yuan ($10.7 billion) for charities in 2010, more than double the previous year, according to the Blue Book of Philanthropy.

The onus then is on the country's charity organizations to use the large sums of donated money and goods appropriately.

For example, the civil affairs department of Hubei province found that only 73.83 million yuan ($11 million) of the 106 million yuan offered went to help those in need after the 2008 snowstorms in southern China. The failure to use charitable funds correctly no doubt has something to do with the lack of supervision over charitable undertakings.

As the country has no law requiring aid groups to publicize monthly or even annual accounts, the donors are in the dark about how their funds are being used. People have never ceased to inquire about where the donated funds and goods are actually going.

Transparency remains a problem for the departments accountable for managing charitable funds as the activities of charitable organizations are shrouded in mist.

Without operational provisions, procedural rules for implementation or measurable standards, donors rightfully worry about donation channels that lack auditing, transparency and supervision mechanisms.

A charity law is needed to regulate fund-raising for philanthropy. The Ministry of Civil Affairs drafted a law on philanthropy in 2006 and reported the bill to the State Council in 2008, but it is yet to be passed.

Some public figures, movie stars and wealthy entrepreneurs have taken advantage of the lack of oversight to conduct charity fraud. On one hand, they make promises that build up their image as philanthropists; on the other, they are reluctant to keep their word, doing their utmost to delay donations. When they do come through, often the sums have dwindled remarkably from the amount originally promised.

The regulatory and institutional deficiencies mean people have every reason to ask why they should put their money in the hands of charitable organizations that they don't trust.

Trust is fundamental to how most charities are run in other nations. We need to learn from their experience and their transparency mechanisms.

Institutional rules are needed to regulate and supervise the country's charity operations. This will help clear the clouds of mistrust that hover over the organizations that are genuine.

It is high time to put the draft Charity Law on the agenda.