China's millionaires are having trouble donating their money to charities due to a lack of trusted NGOs and weak government incentive programs, CNN reported.

Non-profit organizations in China are estimated at around 500,000 while the U.S. has about 1.5 million. Based on a report by GivingUSA, charitable donations by China were recorded at $12.9 billion compared to U.S.' $316 billion in 2012.

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China is still a relatively young developing country, with the first few billionaires recorded recently just 10 years ago. The United States, by comparison, has long been producing wealthy individuals.

China-based researcher of the Conference Board Anke Schrader said that the figures are not unusual given China's still relatively young status compared to the U.S. While China has only produced its first billionaires just 10 years ago, the U.S. has been known to have produced wealthy individuals for a longer time.

Moreover, traditional Chinese culture dictates that one must provide for one's family. So the idea of giving away one's hard earned money to outsiders is a novel concept for most Chinese.

"Entrepreneurs are shifting their thinking from what I would say is a pure consideration of pure wealth accumulation to thinking about wealth distribution," Schrader said.

This shift in thinking can be furthered through the development and implementation of government incentives to encourage philanthropy. Dien Yuen of the Kordant Philanthropy Advisors said that a subsequent effect of a growth in philanthropy will be the need for reform in China's tax codes and a looser grip on civil society.

However, it must be noted that a charitable promotion law has been in the works for about 10 years to no avail; any existing legislations are reportedly "thin, vague and sporadically enforced." Beijing's unclear registration procedures for setting up of NGO's cause many groups to go unregistered and the number of unregistered groups are estimated to be no less than 1 million, according to Yuen. This results in a lack of transparency which can make the donor wary of donating to the organization.

The Red Cross Society of China, a state-run NGO had come under public scrutiny after a supposed employee posted online photos of herself with expensive cars. Although, the organization has denied association with the person, the stigma of corruption has been hard to eliminate. In 2008, the NGO was accused of misappropriating funds for disaster relief after the Sichuan earthquake.

Meanwhile, advocates are increasingly optimistic that Alibaba's establishment of two charitable trusts will encourage more people to donate.

Last month, Alibaba co-founder Jack Ma and current CEO Joe Tsai announced the establishment of two trusts funded by the company estimated to be worth at least $3 billion. The trusts will reportedly support cultural, educational, environmental and medical causes in China, CNN has learned.

"It will send a ripple effect through the community," Yuen said, adding that this will encourage more people to be proactive.

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