PMH Medical Center has ended its relationship with the charitable group formerly known as the Prosser Memorial Hospital Foundation.

The Prosser hospital’s decision to sever ties with the nonprofit became effective July 31.

Since its inception in 2000, the foundation has raised as estimated $2.5 million for the hospital, including $2.15 million for the capital campaign to expand the emergency room.

“The Prosser Memorial Hospital Foundation has always been a legally separate organization from the hospital,” said Claude Zehnder, who joined the foundation’s board in 2015, the same year the foundation received several requests from community groups for help with fundraising, investments and endowments.

“The board then began discussing how it could support those nonprofit groups as well as the hospital,” he continued. “We thoroughly researched the issue, using a CPA, our attorney, the IRS and the state and a review of our bylaws. We changed our bylaws and our name to reflect our expanded purpose, which was to continue to support the hospital and in addition, as opportunities became available, support other nonprofit groups in our community.”

All but one board member voted to move in that direction, Zehnder said. Therefore, the bylaws were changed and a new name was adopted: Northwest Community Foundation.

But PMH Medical Center CEO Craig Marks said because the hospital is a public entity, it cannot legally support other organizations with public money, which led to its decision to terminate its relationship with the foundation.

“We want to make certain that when we support a foundation, they’re dedicated to PMH,” Marks said. “We wish them well, but we need one that’s dedicated to us.”

PMH Medical Center’s Board of Commissioners Chairman Stephen Kenny expanded on the hospital’s decision in a letter sent to donors in mid-August: “It is inappropriate for PMH, as a government entity, to be associated with any organization that may receive charitable contributions from supporters of PMH while, in reality, some of those funds could be diverted by that organization for other purposes. PMH cannot permit the appearance that it is using public dollars to support organizations other than those that support the mission of PMH.”

Zehnder acknowledged the hospital has the right to end the relationship, and the foundation accepted the decision. Moving forward, the group will not seek contributions for the hospital or use the hospital in its marketing material. He noted the cancelled contract only gave the foundation a few days to close the hospital gift shop and remove most of its supplies.

“The hospital cancelled its contract with the foundation, where we paid for time that our executive director and staff worked on foundation items while employed by the hospital and we rented office space,” Zehnder said. “The foundation had rented gift shop space and the profits were given by the Foundation Guild for scholarships to students going to college in the health care field and to support families whose babies had died. We were also told to remove the hospital’s name from our website and all advertising materials, which we did.”

In a separate letter sent to foundation donors, Zehnder assured all prior monetary gifts made through the foundation to specific endowments would remain in those endowments and earnings would continue to be paid to the hospital consistent with investment and distribution policies.

“The foundation’s eight board members—your friends and neighbors—take their fiscal responsibilities very seriously and will follow all laws and existing foundation policies in managing those funds,” Zehnder said in the letter.

PMH Medical recognizes it has been given assurances by the Northwest Community Foundation that any previous money contributed with the intent to support PMH will be used for those purposes but intends to take appropriate actions to see the money is used as donors intended.

“The (former) foundation unilaterally elected (and without the consent or agreement of PMH) to change its basic operating documents to no longer constitute an exclusive support organization for PMH,” Kenny said in his letter to donors.

Zehnder said both sides agreed to try to mediate a settlement.

“Unfortunately, as I understand it, the hospital determined it was not ready to follow through with mediation at this time,” Zehnder said. “It is too bad that it has come to this. Legal action costs money that the foundation could be using to help our community.”

Kenny said public hospitals, such as PMH, rely on established support from foundations to provide the public with an opportunity to make contributions with the understanding the money will be used exclusively for the hospital.

Foundations help with fiscal plans, Marks said, where hospitals can meet the needs of the community and explore new programs. For instance, PMH would like to raise money to enhance technology like its mammography equipment.

Looking to the future, the hospital is forming a new charitable foundation for the exclusive benefit of the hospital and Marks said it is in the process of hiring a director. In the interim, he clarified that donations can be made directly to PMH Medical Center.

“We’re a 501(c)3; people can still donate. We technically have a foundation, there’s just a few more documents that we’re working on: bylaws,” Marks said, adding that along with hiring a director, the group will reach out to community members to form a board.

The director position has been posted nationally and while the board is being formed, the current hospital board of commissioners will serve in its place. Once the lead person is hired, the PMH Medical Center Foundation will line out its fundraising events, such as a golf tournament and gala event the hospital has been associated with in the past.

In 2016, money was raised to provide automated external defibrillators with hard cases and extra batteries for Prosser, Grandview, Sunnyside and Benton City so the high schools could have portable AEDs on athletic fields for use in case of an emergency.

Last month, the Northwest Community Foundation hosted A Night Out at Yellow Rose Nursery, with proceeds going toward The Share House and youth sports. Money also was raised for the Princess Theatre Legacy Fund in Prosser.