In 2006, Sen. Charles Grassley was convinced the American Red Cross was failing at its mission. Among his concerns was an indictment of some workers for stealing relief funds, but the senator was particularly troubled by volunteers who said the congressionally chartered charity had ignored their warnings about problems.

“Red Cross volunteers who have stepped forward to suggest improvements are treated like skunks at a Sunday afternoon picnic,” Mr. Grassley wrote in a column for newspapers in Iowa, his home state.

In 2007, the senator championed a law to overhaul the organization and establish an ombudsman office that, according to his aides, was to investigate waste, fraud, and abuse as well as recommend policy changes.

But today, the Red Cross ombudsman neither conducts investigations nor recommends policies. Indeed, according to the ombudsman, such work is outside his purview.

Exactly what the Red Cross ombudsman does — and should do — are key elements of Mr. Grassley’s latest inquiry into the Red Cross. He was spurred into action by ProPublica and NPR, which have produced several reports critical of the organization’s response to Hurricanes Sandy and Isaac in 2012 and its financial reporting. Their sources included Red Cross employees and others familiar with its operations.

Mr. Grassley’s office has not suggested that the Red Cross failed to abide by the 2007 law; in fact, the law is so vague it doesn’t require specific action.

But whatever the inquiry’s outcome, it makes one thing clear: The Red Cross style of ombudsman, which is similar to those used by many colleges and other large nonprofits, is not well understood.

Some view it as an effective mechanism to manage complaints, but critics say it is at best a diversion from dealing with criticism and at worst a snare to catch whistle-blowers before they go public.

University Origins

Nonprofits began creating ombudsman positions in the late 1960s. Responding to campus unrest during the decade, universities were early adopters, and at least 600 of them now have ombudsmen, estimates John Zinsser, co-founder and principal of Pacifica Human Communications, a conflict-management consulting firm.

The 2002 Sarbanes-Oxley Act, which requires nonprofits as well as corporations to establish procedures for handling “confidential, anonymous” employee complaints, prompted more organizations to open offices. Today, 25 to 50 big nonprofits have ombudsmen, Mr. Zinsser estimates. Teach for America created a new ombudsman office in January.

Most nonprofits, including the Red Cross, rely on what they call “organizational ombudsmen.” These officials, whose backgrounds can include psychology, law, and conflict resolution, do not conduct investigations; instead, they serve as impartial, independent counselors to people who have a dispute with or concern about the organization. Experts say ombudsman offices should be created by a charter — signed by senior management — that stipulates ombudsmen’s independence, prevents them from being fired without cause, and requires them to report to independent board committees. When employees show up with a gripe, the ombudsman advises them about their options, which can include talking to their bosses, filing an official complaint, seeking outside legal help, or doing nothing.

Typically, organizational ombudsmen say they try to handle complaints in a low-pressure, informal way. This approach encourages others to come forward and is better suited for nonprofits than the watchdog-style ombudsmen that governments use to investigate complaints, Mr. Zinsser said. “It’s much more the way people try to solve problems: through dialogue, through exploration and learning.”

Ideally, ombudsmen connect the dots from their many contacts with individuals and identify any troubling patterns. Mr. Zinsser said they function as a high-powered lens, training attention on small issues that could signal bigger problems within an organization, including fraud, racial discrimination, high turnover, and lack of employee engagement.

Because an organizational ombudsman’s work is confidential, it typically draws little notice from leaders or the rank and file. Jennifer Moumneh, senior associate ombudsman at University of California at Irvine, said that when possible, she resolves issues rather than bringing them to the attention of the university’s leaders. Most individuals who use her office are referred by coworkers who have had positive experiences, she said. “When we are doing our job the right way, people don’t know.”

Outlets for Complaints

Such a low profile may work against the effectiveness of ombudsmen, however. Employees won’t turn to the office if they don’t trust it or understand its function. And, Ms. Moumneh said, “there’s a lot of confusion around the purpose and the role” of the ombudsman.

With social media and the proliferation of online publications, employees and volunteers may simply choose to take their concerns elsewhere. “Ethical employees who see unethical behavior have many outlets now,” said Paul C. Light, a professor of public service at New York University.

But Robert Ottenhoff, chief executive of the Center for Disaster Philanthropy, suspects that some individuals steer clear of ombudsmen because they question their independence or believe they lack teeth. They may not “see the ombudsman as empowered to actually do anything,” he said.

Some critics go further and say the organizational ombudsman system is inherently flawed.

“Any whistle-blowing process that is managed internally and isn’t transparent is a joke,” said Ben Smilowitz, founder of Disaster Accountability Project. Mr. Smilowitz created the nonprofit, he says, after the Red Cross removed him from volunteer duty during Hurricane Katrina for telling a CNN reporter his staff lacked computers to automate relief-effort records. Though there was no ombudsman office at the time, Mr. Smilowitz said he wouldn’t use one now. A Red Cross spokesman confirmed Mr. Smilowitz was sent home for “multiple reasons” but did not provide details.

Some whistle-blower advocates share Mr. Smilowitz’s suspicions.

“We advise whistle-blowers that it can be very treacherous to rely on an ombudsman,” said Tom Devine, legal director at the Government Accountability Project. “The ombudsman and the grievance system are to maintain appearances and divert employees from independent, more credible options.”

Because organizational ombudsmen are given great latitude in handling complaints, Mr. Devine suspects many may discourage whistle-blowing because of management pressure. Others may fear they will suffer retaliation for advancing complaints or that the employees they help could get in trouble.

Ms. Moumneh at the University of California says she does not worry about retaliation against herself, but she cautions those who come to her to avoid using forms of complaint reporting, like whistle-blowing hotlines, if the organization can deduce who they are.

“We try to help think of ways to still protect the identity of the person if that’s what they want but still get the issue raised to the benefit of the organization,” she said.

Vague Mission

Debate about the effectiveness of the organizational ombudsman could get a very public airing with Mr. Grassley’s inquiry into the Red Cross. The senator’s aides say the office seems to focus on improving workplace issues and diffusing employee conflicts. It’s “acting like another layer of HR,” one said.

Kevin Jessar, who leads the four-person ombudsman team at the Red Cross, joined the organization in 2009 from a deputy-ombudsman position at the National Institutes of Health.

Mr. Jessar said in an interview that his office fulfills the normal duties of an organizational ombudsman. “It’s for people to decide when they come with us how they want to handle their situation,” Mr. Jessar said. “We don’t advocate for a particular change.” Similarly, the office does not endorse a course of action when informing Red Cross leadership about a systemic issue.

Though Mr. Grassley may want a watchdog-like entity embedded within the Red Cross, the law that created the ombudsman office is itself vague; it requires only that the ombudsman serve as “a neutral or impartial dispute-resolution practitioner whose major function will be to provide confidential and informal assistance to the many internal and external stakeholders of the American National Red Cross.”

What’s more, the office’s charter states that the office can decline to act on any complaint or concern.

The annual reports prepared by the Red Cross ombudsman’s office reveal only general information about its contacts with employees, volunteers, and others. The number of individuals who have turned to the office has increased almost every year, but there’s no clear cause, Mr. Jessar said.

In the ombudsman’s 2013 annual report, which covers the aftermaths of Hurricanes Sandy and Isaac, the office said it had handled 153 issues raised about Red Cross disaster services, only about 11 percent of its 1,406 total that year.

Breaking those 1,406 issues down by a different classification system, the one used by the International Ombudsman Association, the office worked with 639 “services and administrative” issues, 317 “evaluative relationship” (supervisor and employee) issues, and 36 “values, ethics, and standards” issues. Out of 979 people who contacted the ombudsman in fiscal year 2013, 58 percent came from outside the organization and 42 percent were internal, including 101 volunteers and 309 employees.

Citing the confidentiality of the ombudsman office, a Red Cross spokesman declined to comment when asked whether individuals interviewed by ProPublica and NPR got in touch with the ombudsman office before they contacted journalists. But she did say it would be an “incorrect premise” to assume that these volunteers or employees went public because their concerns had not been “properly addressed” by the organization.

Justin Elliott, a ProPublica reporter, said the tip that prompted ProPublica and NPR to investigate the Red Cross came from “an informed person.” Mr. Elliott said his request for more information yielded a “slow trickle of tips” from employees or people with connections to the organization.

“The best sources were good people who care a lot about the Red Cross and thought that leadership is making serious missteps and is leading the organization astray,” he said.

Mr. Elliott does not recall any sources mentioning the ombudsman. He notes that a leaked Red Cross employee survey showed that only 39 percent of participants responded favorably to the statement, “I trust the senior leadership of the American Red Cross.”

“Our experience with individuals and also this survey shows there’s a serious crisis of confidence within the Red Cross among employees,” he said.

In response, a Red Cross spokesperson said 32 percent of survey participants responded neutrally to that question, with the remaining 29 percent responding either that they disagreed or strongly disagreed. Additionally, she noted that 61 percent of Red Cross employees surveyed felt the American Red Cross shows commitment to ethical business decisions and conduct.

“Our instances of fraud have gone down since Hurricane Katrina,” she said. “Our informal and formal systems of reporting concerns have helped the Red Cross address these concerns.”