It was the third consecutive year the central government financed the NGOs.

In Shanghai, which is home to more than 11,000 social organizations, funding by the government accounts for 15.8 percent of the income that those groups received in 2012, according to figures from the city's Civil Affairs Bureau.

Shanghai was the first city in China to build hubs that incubate grassroots NGOs and social enterprises in 2009. Cities like Beijing, Shenzhen, Chengdu and Hangzhou have followed suit.

As of 2012, Shanghai municipal government had invested nearly 180 million yuan in the hubs, according to studies of Xu Jialiang, a professor at the Center for the Third Sector at Shanghai Jiao Tong University.

"But nearly all these hubs are cooperatives between the government and social organizations, while the business model of a market economy is seldom introduced into a project," Xu said.

He suggested that companies can also play a role in operating the hubs and in the NGOs' projects, which he said would bring more efficiency to the sector.

"The input and output of the projects should be evaluated, so as to make the hubs and projects sustainable and finally run without the backing of the government," he said.