It is critical for a charity to be transparent about how donors' money is used, so people can make informed decisions on whether to support it, said Charity Council chairman Gerard Ee.
This includes full disclosure of how much funds are raised, where they are channelled, and for what purpose, which is typically outlined in a charity's annual report.
Once that is done, the donor can then vote with his chequebook, he said. "It's not right or wrong. It is a choice. So transparency is the key thing."
The Charity Council was formed in 2007 to push charities into adopting good governance and best practices.
Speaking to The Sunday Times, the veteran of the charity scene, who helped set up Assisi hospice and helmed the National Council of Social Service, outlined key areas which charities have to be particularly meticulous about.
One area is transparency. Equally crucial for a charity, added Mr Ee, a retired accountant, is a vigilant board.
He pointed out that governance issues in a charity point to a board which lacks oversight, and that a passive director is unacceptable.
"This concept of a 'sleeping director' does not exist. Once you are in it, friend or no friend, you are responsible. You are accountable," he said.
Mr Ee stressed: "You are just as accountable when you know what is going on but do nothing about it."
To safeguard against poor governance, the sector administrator can probe the operations of a charity to uncover weaknesses and wrongdoing. This is done by appointing an auditor to do a review of the organisation.
Mr Ee said such special audits are done by the authorities to separate rumours from legitimate concerns.
"If it's just one, two rumours, usually we don't bother. But once there's smoke, we will begin to dig and ask around.
"If there's enough reason to feel uncomfortable, we will get people to look into it."
Samantha Boh and Zaihan Mohamed Yusof