AVH and fundraising arm in legal dispute over money

by Carolyn Sackariason, Aspen Daily News Staff Writer

What was characterized as an amicable split last year between the Aspen Valley Medical Foundation and Aspen Valley Hospital to focus on separate fundraising efforts has turned into a legal dispute over money.

Both entities have lawyered up as a result of their disagreement over how much money Aspen Valley Foundation (the nonprofit dropped the word “medical” from its name last fall) owes the hospital from fundraising for the health care facility before they separated.

The difference of opinion on how much the foundation owes the hospital may be as much millions of dollars, according to sources familiar with the dispute.

Aspen Valley Foundation (AVF) President and CEO Kris Marsh declined to comment on the situation, as did John Sarpa, interim chief operating executive for AVH. AVF board members also declined comment.

But both entities’ lawyers offered a joint statement to the Aspen Daily News.

“The Aspen Valley Foundation and the Aspen Valley Hospital are engaged in negotiations regarding matters associated with their separation, including amounts due to the hospital,” said Michael Carrigan, a Denver-based attorney with Holland & Hart LLP, who represents AVF. Aaron Bradford, an attorney with Denver-based Lathrop & Gage LLP, who represents AVH, was in Carrigan’s office when the statement was read on Wednesday afternoon.

“Both entities are committed to ensuring donor funds are protected and donor intent is honored,” Carrigan added.

Neither attorney would say when they were retained, citing attorney-client privilege. They also declined to say how much money is in dispute.

According to a press release issued last June announcing the “spin off,” the foundation had granted $9.4 million for the hospital since 1999, and had raised an additional $12.5 million for the expansion of the facility, which is under construction and is in phase two of four. The foundation also has given out $6.7 million in community grants and more than $1 million in scholarships.

The hospital created its own foundation — the Aspen Valley Hospital Foundation — last year to focus on a $60 million philanthropic campaign to raise money to cover the costs of phases three and four of the expansion, which will not be built until the fundraising goal is met, AVH officials have said.

The medical foundation was formed in 1973 to not only be a fundraising arm of the hospital, but also to enhance health and wellness for all residents of the Roaring Fork Valley, which is still the focus.

Foundation grants have aided in the hospital purchasing medical equipment such as X-ray machines, and helped build the facility’s conference center. Donors sometimes request that their funds go toward specific projects and initiatives.

AVF now focuses on raising money for health and human services and nonprofits related to health care in the valley. That includes support of the planned continuing care retirement community in Basalt, hospice services throughout the valley, drug and alcohol counseling and the Aspen Hope Center, which offers suicide prevention services and training. It also funds direct assistance for the uninsured, local ambulance districts, the Aspen Homeless Shelter and scholarships for health care professionals to advance their expertise.

Whether the disputed donations to the medical foundation were specifically given for one of the above mentioned causes or to the hospital — either prior to its spin off from AVH or after the separation — is unclear.

The hospital’s foundation focuses exclusively on raising money for the capital campaign. It hired Deborah Breen as president in January. In March, she told the Aspen Daily News that $15 million has been committed toward the $60 million effort. She noted that it’s common for hospitals to raise funds in-house.

She said at the time that the foundation was in the midst of a quiet capital campaign and was reaching out to potential donors who are capable of committing seven- and eight-figure amounts. A more formal push will occur this summer, with a goal to raise $25 million from individuals. That would put the foundation at $40 million by the end of 2013 or in the spring of 2014. The plan for the following year is to raise the remaining $20 million through a public capital campaign. The foundation is still in its formative stages and a board of directors has not yet been established. The first part of AVH’s expansion was paid for by voter-approved bonds and the hospital’s cash reserves.

When AVF changed its name last fall, it suspended fundraising efforts until this year — its 40th anniversary — to re-educate the public as to what its function is.