- The Washington Times - Monday, May 14, 2001

D.C. executive combines business consultancy with community ideals

Charito Kruvant has her gaze fixed on the day when doing right and doing business are one and the same.

But for now, she is settling for for-profit international consulting, an embryonic industry that makes money barely from the type of community-building activities that Mrs. Kruvant undertakes for free around Washington.

"If you're looking at the revenue side, this is not the business to be in," she says cheerfully from her office in Friendship Heights.

D.C.-based Creative Associates International, of which Mrs. Kruvant is president and chief executive officer, specializes in institution-building in countries ravaged by civil war and economic distress. Creative currently manages $200 million in contracts, almost exclusively with the U.S. Agency for International Development, and has field offices in nine countries, mostly in Africa and Latin America.

Mrs. Kruvant also works with organizations such as the Greater Washington Board of Trade, D.C. Public Schools and the Potomac Conference, a group of business and community leaders.

Invigorated largely through the activism of individual members like herself, these groups set their sights on a nearer objective: how to turn the Washington area into a region where a lasting prosperity is shared broadly.

"Here I do the work for free," she says in a interview with The Washington Times. "But the techniques are pretty much the same."

Displaying her knack for fusing community activism with professional interests, Mrs. Kruvant hosted a meeting May 4 at the International Trade Center dealing with how the federal government awards contracts, and how to get in on the action. It included small businesses, city economic development officials and local activist groups.

This dual role seems to sit well with Mrs. Kruvant, 55, a native of Bolivia who came to the United States to attend college in 1966. Her high cheekbones and almost Asian features belie her indigenous heritage. She speaks the language of business in addition to her native Spanish and a smattering of French but always preaches the gospel of diversity and inclusiveness.

A gentle elbow

Far from engendering resentment, Mrs. Kruvant's work has won widespread approval from her peers.

"She's very soft-spoken," says Dave Rutstein, of counsel at the Venable law firm in the District, and last year's chairman of the Greater Washington Board of Trade. "But anyone who knows her will listen carefully."

Julie Rogers, president of the Eugene & Agnes E. Meyer Foundation, recalls a November meeting at George Mason University of the Potomac Conference at which Mrs. Kruvant lived up to her reputation as a gentle elbow in the ribs to area business leaders.

Trying to drive home her point about the need to understand the diversity of the Washington area, Mrs. Kruvant asked members of her audience to cover their ears. She continued speaking, effectively excluding all but one person in the room: I. King Jordan, the president of Gallaudet University, who, like his students, is deaf, but had an interpreter with him.

The normally chatty corporate titans got the point.

"You could hear a pin drop, which is rare in those meetings," says Ms. Rogers, who has known Mrs. Kruvant for 10 years.

Partly as a consequence of Mrs. Kruvant's work, the conference's Potomac Index, which measures community progress on a range of issues, includes sections on income distribution and Internet access. The information shows that broad-based prosperity in Northern Virginia has not spilled over into the District.

Mrs. Kruvant says she has tried to focus on projects that have the potential to break out of old stereotypes. One, put together last year when she served on the Board of Trade, links up large businesses in the outlying suburbs with companies, usually black-owned, in the District.

"It allows us to cross boundaries of race and class," she says.

Creative Associates International traverses the types of boundaries one sees on a map of the world. The realities of running a business have also given what Mrs. Kruvant terms her "lofty idealism" of community service in Washington a dose of reality.

Nurturing democracy

The core of its business is using federal government money to nurture societies where democratic and market institutions are fragile. In Lebanon, for example, Creative administered money from the U.S. Agency for International Development (USAID) to rebuild its economy after the country's prolonged civil war and to promote citizen involvement in key decisions.

Mrs. Kruvant's work has brought Creative into the wake created by several recent world conflicts tinged with domestic U.S. politics.

In 1989, Congress and the first Bush administration agreed to cut off lethal aid to the Contras, the anti-communist guerrillas in Nicaragua. Creative's people, under a $1 million contract with both USAID and the Defense Department, had a hand in helping demobilize the soldiers.

Mrs. Kruvant and two other women founded Creative in 1977 after participating in a project funded by the federal government and the Ford Foundation. It created the process for certifying day-care centers that receive backing from Headstart, the federal job-training program.

She and her partners, including Mimi Tse, now Creative's chief financial officer, pondered how they could put consulting techniques to work overseas, while still keeping their independence.

"It was a time when we women were really questioning our relationship to the business community," she says.

Mrs. Kruvant and her partners were well versed in the nonprofit world, but wanted to venture into the business world and provide a service for which they would be paid. The solution was to form a company that made at least a little money doing development work.

Mrs. Kruvant frankly admits that government contracting preferences for minorities and women were key to Creative's early success in the 1980s, but the firm is now solidly established in the field, respected by clients and competitors alike.

The crucial difference between Creative and a publicly held company is that net income is not returned to shareholders in the form of a higher stock price, nor does it pay dividends. Instead, the money is plowed back into progressively larger challenges, Mrs. Kruvant says.

For starters, the federal government pays 90 days after a cost is incurred, so contractors must be ready to absorb many costs up front. Scouting out potential new projects overseas is also a costly endeavor.

By the standards of any for-profit company, Creative, with 200 employees worldwide and 89 in Washington, is a shoestring operation. Fees on all of its contracts in 2000 brought in $17 million in gross income, and netted a 3.5 percent profit about $595,000.

"By the standards of a traded company," she says bluntly, "I'm a loser."

Looking for new business

But Creative, along with other for-profit firms, is also exploring how to make money advising the "corporate sector" companies that need expertise on the ground.

Many large corporations, especially in the petroleum and mining sectors, have a record of fractious relations with communities where they drill or dig. Some companies believe that USAID contractors, with a broad array of contacts, can prevent local feathers from being ruffled in the first place.

Already, Creative has wrapped up contracts with two well-known oil companies, the names of which Mrs. Kruvant declines to specify.

Corporate interest in the services of firms like Creative has also led to a few acquisition offers, though Mrs. Kruvant declines to specify those companies. Other consulting firms, though they also refuse to name potential suitors, say corporate interest is on the rise.

Chris Smith, a senior vice-president at Chemonics International in the District, says his firm, which does work similar to Creative, had serious discussions with a large corporation six years ago about an acquisition. Now, it is advising confidentially several Fortune 500 corporations in the "extraction industries" that have operations in African nations.

"Not many corporations know how to operate in these countries," he says.

They are particularly interested in how to manage relations with local communities, and how to manage the environmental impact of their projects.

Corporate clients are currently a tiny fraction of Chemonics' business, 95 percent of which involves USAID contracts, Mr. Smith says. It took in $125 million last year for a net profit of $2.7 million, a 2.1 percent return.

One appeal of the corporate sector, he says, is that it offers potentially higher profit margins than the government work that is currently international consultants' bread and butter.

"That business is relatively stable," he says.

Mrs. Kruvant expects that other consulting firms that look mainly to government contracts will adjust their focus. They will be, mostly, nonprofit enterprises that have for-profit "clusters" that make a solid profit.

Already, she points to universities as models. They are fundamentally not-for-profit organizations. But their research facilities, for example, net moneymaking patents.

"We're going to see more and more hybrid businesses like ours," she says. "More and more nongovernmental organizations will have to face the fact that they have to think long-term."

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