Update 1/18/20: The Queen and Buckingham Palace released simultaneous statements finalizing Prince Harry and Meghan Markle's decision to step back from royal duties. According to Buckingham Palace's announcement, Harry and Meghan "will no longer receive public funds for Royal duties." The couple has also expressed interest in repaying "Sovereign Grant expenditure for the refurbishment of Frogmore Cottage, which will remain their UK family home."
Original post: Today, the Duke and Duchess of Sussex announced their plan "to step back as ‘senior’ members of the Royal Family and work to become financially independent," which of course raises many questions about what exactly this all means, including one big one: If they're cut off from the Royal Family funds, where will their money come from?
Despite jokes on Twitter about Meghan Markle reprising her role on Suits (hey, they're probably moving back to Canada where Markle lived while the show was filmed!), that's likely not happening. But this is a HUGE change. Right now the Sussexes don't earn an income—in fact, they're prohibited from it. As the official Sussex Royal page explains, "Under the current structure and financing arrangements, they are prohibited from earning any income in any form." This applies to their charitable work as well.
This, however, does not apply to all members of the royal family. Some, like Princess Beatrice, hold or have held more traditional jobs that pay an outside income. As Royal Sussex site notes, "there is precedent for this structure and applies to other current members of the Royal Family who support the monarch and also have full time jobs external to their commitment to the monarchy." This is the model the Sussexes plan to adopt.
"The Duke and Duchess of Sussex take great pride in their work and are committed to continuing their charitable endeavours as well as establishing new ones. In addition, they value the ability to earn a professional income, which in the current structure they are prohibited from doing," the Sussex Royal site explains. "For this reason they have made the choice to become members of the Royal Family with financial independence. Their Royal Highnesses feel this new approach will enable them to continue to carry out their duties for Her Majesty The Queen, while having the future financial autonomy to work externally. While the contribution from The Sovereign Grant covers just five percent of costs for The Duke and Duchess and is specifically used for their official office expense, Their Royal Highnesses prefer to release this financial tie."
And this is the key element: It seems that "becoming financially independent" specifically means the Duke and Duchess will no longer receive funding through the Sovereign Grant, which comes from British taxpayers. "The Sovereign Grant is the annual funding mechanism of the monarchy that covers the work of the Royal Family in support of HM The Queen including expenses to maintain official residences and workspaces. In this exchange, The Queen surrenders the revenue of the Crown Estate and in return, a portion of these public funds are granted to The Sovereign/The Queen for official expenditure."
But! As noted before, The Sovereign Grant covers just five percent of operating costs for The Duke and Duchess—the other 95 percent of their living comes from The Duchy of Cornwall, which is run by Harry's father, Prince Charles. The Duchy of Cornwall is a private estate established by Edward III in 1337. "The revenues from the estate are passed to HRH The Prince of Wales and Duke of Cornwall, who chooses to use them to fund his public, charitable and private activities and those of his family," the official Duchy of Cornwall site states. "The Duchy consists of around 53,000 hectares of land in 23 counties, mostly in the South West of England. The principal activity of the Duchy is the sustainable, commercial management of its land and properties. The Duchy also has a financial investment portfolio."
So! The short answer to how Prince Harry and Meghan Markle will continue to have an income is: The Duchy of Cornwall. Right now there's no indication that Prince Charles will curtail the funds that go to "private activities and those of his family" as it applies to the Sussexes.
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