You need to learn about how matlab workspaces work.
when you pass a parameter into a function, matlab creates a function workspace, i.e., a copy of all what you send in. Then all your computations are performed and finally only the outputs are returned. All those temporary variables you created are lost. If you don't assign the output to any of the existing base workspace variables, then you cannot expect to see the change happened inside the function call afterwards.
If you want c to change because of the function, you should have
function [a, parameter] = TestingFunctions2(parameter,d)
b = 1
c = 1
parameter = d;
a = parameter
end
and call it on the command line/main script like,
[a, c] = TestingFunctions2(c,4);
