Unfortunately, many corporations neglect the fact that approximately sixty percent of the world’s population lives in poverty. The facts are disheartening: According to the World Bank, 1.2 billion people around the world live on less than $1 per day, while another 2.8 billion people live on less than $2 per day. The poor live their daily lives in fear of death and safety.
On October 24th, 2007, Golden Globe Award-winning actress, Natalie Portman (Harvard ’03), addressed the Harvard Business School community on global microfinance. A Harvard graduate and a social activist, Portman was appointed the Ambassador of Hope for FINCA International five years ago. FINCA is a global microfinance organization that provides community-based savings opportunities and small business loans to the world’s lowest-income entrepreneurs through its Village Banking Campaign. On a Wednesday evening in the packed Burden Auditorium at the Harvard Business School, Portman provided insights about microfinance and its powerful ability to fight global poverty.
Natalie Portman described her personal experiences in Mexico, Uganda, Equador, and Nicaragua as a goodwill ambassador for FINCA International. Professor Michael Chu, the Senior Lecturer in the Initiative on Social Enterprise of the General Management Group of the Harvard Business School, moderated the event. He graciously introduced Portman as a spokesperson for the institution, and appreciated her convening power as a Hollywood actress.
Fighting World Poverty through Microfinance
The practice of providing small loans to the poor became internationally recognized when the Norwegian Nobel Committee awarded the 2006 Nobel Peace Prize to Muhammad Yunus and his Grameen Bank. Founded in Bangaldesh, Grameen Bank served as a model for the world’s business and political leaders, and proved that micro-financing ends poverty both sensibly and profitably. Grameen Bank offered not only low-interest personal loans to the poor without financial security, but also housing loans, microenterprise loans, educational scholarships and educational loans.
Modeled after Grameen Bank, FINCA concentrates on providing assistance to women. Socio-economic power to women leads to better education, health, domestic violence, and lower birth-rates among individual families. Financial independence generates only a positive cycle of self-sufficiency, and micro-credit serves as a powerful tool to dispel the underlying causes of the world’s poverty and hunger. Portman mentioned that women and children make up 70% of the world’s poor. The goal of FINCA is to grow from having 600,000 clients to a million clients. There exists no margin for error. Since clients simply cannot afford to not repay their loans, the recovery rate of the FINCA loans is 97%. For many clients, the loan offered by FINCA is the sole opportunity to cure and permanently end a cycle of poverty for their families. Portman urged academic communities to open their hearts and minds to facilitate the process.
The Bonsai Tree and Trickle-up Economics
Conventional society holds an inability to provide the roots for the underprivileged to explore their full potential. Foreign aid is frequently criticized for its inability to neither accelerate economies nor improve the world’s poverty in developing nations. Unfortunately, financial assistance is usually issued to those who do not need them, oftentimes benefiting the wealthy, such as foreign consultants, bureaucrats and contractors. Loans, in fact, should be issued to the poor who truly need them.
According to Yunus, poverty exists in society due to the small flowerpots upon which the poor are given to grow. These flowerpots symbolize the economic base. While conventional banking qualifies its customers by looking at financial histories and what the person has already achieved, microfinance organizations such as FINCA look at the roots for human potential: inner strength so strong that, given the opportunity to rise above their current circumstances, they hold the seeds of the strong Bonsai tree to grow incredibly innovative and resourceful. Trickle-up economics allows the roots of the Bonsai Tree to grow.
Successes of FINCA
Microfinance organizations such as FINCO have proven that even the poorest of the poor have the strength and ability to help themselves out of poverty. They recognize the world’s poor as a potential market opportunity because they have realized that elevating the socioeconomic status of the poor enables bridges to be built between nations. As a byproduct, both parties benefit: the living situations of those who live below the poverty line are improved and sustainable profit is driven. Since its inception in 1984, FINCA has lifted the lives of hundreds of thousands out of poverty. Currently, FINCA operates in approximately twenty different countries.
Concluding Remarks on Natalie Portman and Microfinance
The evening with Ms. Portman was a success, particularly because it attracted people who were previously not exposed to the world of microfinance. Ms. Portman expressed her personal appreciation for FINCA and the effectiveness of other microfinance organizations. In a personal interview following the event, Portman expressed her particular appreciation for humanitarians such as Bono and Angelina Jolie. She thanked Harvard for preparing her in a great way to open her mind to the world. She further mentioned in the interview that Harvard students are extremely privileged to have the education, and that they will continue to live a privileged life. Therefore, they must be reminded to commit to keeping their eyes open to the world in order to make a difference.
Like UN Ambassadors Angelina Jolie and Audrey Hepburn, Natalie Portman admitted that she was not an expert in the field of microfinance. It would only be absurd to expect ambassadors to be experts in the field of microfinance. The evening was not built to be an in-depth, analytical discussion on microfinance. On the other hand, the evening with Natalie Portman was a wonderful evening that celebrated the beautiful actress’ commitment to fighting global poverty effectively with microfinance. She did not speak from an empty script. Instead, she spoke from her heart.
Natalie Portman’s visit to the Harvard Business School was sponsored by the HBS Social Enterprise Club (SEC).
Many thanks to Meredith Messer, Vice President for Headline Speakers of the HBS Social Enterprise Club, for organizing the event.