Monday, October 1, 2007

Actress-Activist Natalie Portman Urges Students to Help Alleviate Poverty

STANFORD GRADUATE SCHOOL OF BUSINESS —Actress and activist Natalie Portman called on an audience of students at Stanford University to think of ways they can help the world’s poor.

Speaking recently about microfinance and her work with FINCA International, a nonprofit that provides financial services to the poor, Portman provided the inaugural address in the Social Innovators Speaker Series launched by the Center for Social Innovation at the Stanford Graduate School of Business.  The Center’s Public Management Program and the Stanford Center for International Development co-sponsored her appearance.

She was joined on stage by Stanford Business School faculty member Garth Saloner, who moderated the discussion. 

"Incredible poverty" in some parts of the world means more than 3 billion people are living on less than $2 per day, said Saloner, who is the Jeffrey S. Skoll Professor of Electronic Commerce, Strategic Management, and Economics, and Codirector of the Center for Entrepreneurial Studies at the Business School. He also noted "the critical capital constraints that the entrepreneurs in these countries face."

"You meet shopkeepers in very small shops with very sparse shelves, who wish that they had more products on the shelves and a broader range," Saloner said. "But they have no working capital."  Saloner led MBA students on a service learning trip to Uganda and Kenya in March 2007.

Giving small loans to help the poor start businesses helps people raise their standard of living. It also means more children can go to school and fewer are malnourished. But traditional financial markets have failed to serve these people, in part because it’s easier to make money on larger loans. Microfinance addresses this need.

Portman told the story of a woman in Uganda who was one of FINCA’s first clients there. She had been living on less than $1 per day, raising 10 daughters. “She was begging her neighbors for their dirty laundry water so she could wash her kids’ clothes,” Portman said of the woman’s life before she started her own business. More than 10 years ago, the woman opened a roadside food stand with a loan from FINCA. By 2004, when Portman met her, she had expanded her business to a restaurant that employed other local people. All of her children were in school, including one daughter attending university. “Her entire life was changed,” Portman said.

Portman said seeing the psychological change in the women who are served is one of the most rewarding aspects of her work. “It’s not charity. It’s just widening opportunity,” she said. The women’s self-confidence grows as they become better able to support their children, she said.

Portman, who was born in Jerusalem and raised in New York, has been working with FINCA for almost four years, traveling around the world and meeting with the recipients of the loans. She is a graduate of Harvard University and an Academy Award-nominated actress whose films include Closer and Star Wars: Episodes I, II and III.

Portman explained how FINCA works: It sets up “village banks” in remote areas to serve poor populations. A bank can be established with $5,000. A group of residents, usually women, sets up the bank’s governance, deciding who should receive loans and using social pressure and support to make the system work. FINCA’s clients repay their loans at a rate of 97 percent.

FINCA now serves more than half a million clients around the world. In several countries – including Mexico, Ecuador and Azerbaijan – it has more than 50,000 clients. The group is hoping to expand into new countries and reach 1 million people by 2010.

Portman listed the benefits that come from the loans: improved education, nutrition, medical care and shelter for the women and – most of all – their children. And, she said, there is likely an indirect environmental benefit as well, since microfinance serves primarily women, and birth rates tend to go down when women’s social and economic situation improves.

She acknowledged, however, that microfinance alone will not alleviate the poverty and the problems that accompany it. She said she has spoken with FINCA clients who tell her they have worked hard and managed to put their children through university, only to have them find that there are no jobs available when they finish. “It’s clearly not the only thing that’s needed,” Portman said. But, she said, it is a strategy that can lift a family out of poverty in just one generation.

In response to a question from an audience member, Portman addressed what she called the “big debate” about whether for-profits or nonprofits are better suited to microfinance. For-profits say they are more efficient, she said, and may have an easier time raising money since people will be investing rather than donating. On the other hand, some have questioned whether it’s ethical to make a profit from people who are so poor. Portman said that from the clients’ point of view, it’s good to have both types of services competing with each other.

And she asked her audience to look for innovative ways to improve the lives of those in dire poverty. Contributing to groups like FINCA is one way, but people also can use their expertise, for example, to help develop technology that would make processing these small loans more efficient.