The Firm vs. the Family: How Does the British Monarchy Really Work?

By: Melanie Radzicki McManus  | 

Commonwealth Day Service 2020
Prince Harry, Duke of Sussex; Meghan, Duchess of Sussex; Prince William, Duke of Cambridge; Catherine, Duchess of Cambridge and Prince Charles, Prince of Wales attend the Commonwealth Day Service 2020 on March 9, 2020 in London. Phil Harris - WPA Pool/Getty Images

The world was shocked when Prince Harry and his wife, Meghan Markle, announced they were leaving Britain's royal family in January 2020. A second jolt occurred when the two (aka the Duke and Duchess of Sussex) sat down for an interview with Oprah Winfrey in March 2021 and revealed how disheartened and "trapped" they felt by the royal institution. They also tried to explain about how the Crown operates.

"So there's the family, and then there's the people that are running the institution," Meghan said, according to USA Today. "Those are two separate things. And it's important to be able to compartmentalize that, because the Queen, for example, has always been wonderful to me."

It's a complicated, convoluted system. The royal family consists of Queen Elizabeth II and her husband, Prince Philip (the Duke of Edinburgh), plus their four children: Princes Charles, Andrew and Edward, and Princess Anne and their spouses. Elizabeth and Philip's eight grandchildren and 10 great-grandchildren are also royals.

trooping the color, royal family
If you didn't make it onto this balcony at Buckingham Palace, you are likely not a member of the royal family.
Chris Jackson Collection/Getty Images

But this family is also part of a sprawling business institution with thousands of employees that manages royal affairs. As with any other company, these employees work in human resources, public relations, information technology, housekeeping and so on, in addition to occupying visible roles such as personal secretaries, drivers and security. About a century ago, King George VI (Elizabeth's father) dubbed this combination of business and clan as "The Firm."

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Who Pays for the Royal Family?

With so many employees and such prominence, The Firm requires a lot of money to operate. In 2020, the bill came to £82.4 million, or about $114 million. These funds don't come from taxpayers per se, but from a convoluted system with real estate at its core. Here's how it works.

Every year, the U.K. government gives the royal household a monetary allotment called the sovereign grant. The money in the grant is a percentage of the surplus revenue from the Crown Estate, an extensive real estate portfolio belonging to The Crown. The portfolio's profits mainly come through annual appreciation and farming. In 2017, the monarchy received 25 percent of the Crown Estate's surplus net income — a jump from the previous 15 percent — plus an additional 10 percent allotment that will last a decade to refurbish Buckingham Palace. The government retained the remainder of the surplus.

Laura Clancy, a media lecturer at the U.K.'s Lancaster University and author of upcoming book "Running the Family Firm: How the Monarchy Manages Its Image and Our Money," says via email that Queen Elizabeth II doesn't personally own the Crown Estate. Instead, it's a publicly owned property portfolio held in trust by The Crown. "This means that if the monarchy were abolished, all of the profits from the Crown Estate would go to the public," she says. A tempting thought for nonroyals.

Clancy also notes that the sovereign grant is often reported to be the official cost of the monarchy, but that's not accurate. The royal family's security is paid for by the Metropolitan Police, plus local councils pick up the tab for royal visits. "This means the monarchy costs more than the official reports from the sovereign grant," she says.

Working royals, like the Queen, Prince Charles, Prince William and his wife, Kate, the Duchess of Cambridge, receive funds from the sovereign grant to support their work, travel, staff, clothing and residence renovations. They do not receive set salaries, however, nor are they typically allowed to do paid work. But the Queen receives a substantial income from the private Duchy of Lancaster, a set of commercial, agriculture and residential properties that was attached to the monarchy in 1265. In 2019-2020, it generated more than £25 million for her, or $34.7 million. Similarly, as heir to the throne, Prince Charles receives income from the private Duchy of Cornwall, also established centuries ago. The two pass on some of this income to their heirs, although it isn't known how much.

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Who's Really Running Things?

The Firm's complexity involves a lot more than money, though. Another aspect that's difficult for outsiders to grasp is its myriad rules, regulations and traditions. Some are noncontroversial (e.g., bowing or curtseying to the Queen), but many others seem silly or off-putting. Women are always supposed to wear pantyhose, for example, and never cross their legs while sitting. Makeup should be minimal, and couples aren't supposed to engage in any PDA — not even hand-holding. Oh, and you shouldn't close your own car door. Who's making these rules, insisting they be followed or allowing them, at times, to be broken? Clancy says it's unclear.

"The operations of the monarchy are complex, and there are many different individuals involved in running the institution, from public relations to HR to financial advisers," she says. But tradition is important, as it's a form of historical legitimacy for the monarchy.

And this is where things loop back to Prince Harry and Markle. For one final, major component of The Firm is the royal rota, or pool system comprising a group of reporters and photographers from seven U.K. publications. For the past 40 years, the royal family has granted the rota special access to their royal engagements in exchange for coverage, as coverage helps maintain the monarchy's relevance. These press members are expected to share material with each other. Today, four of the rota publications are tabloids, including the Daily Mail and the Sun. And these rota journalists often write about Markle harshly, and sometimes in a racist manner.

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A selection of headlines from British newspapers in response to Meghan and Harry's interview with Oprah Winfrey on March 8, 2021. Most of the papers represented are members of the royal rota.
Chris Jackson/Getty Images

One of the biggest reasons the couple left the royal family, according to the Winfrey interview and other press accounts, appears to be their distress and disgust with the rota, and their wish to escape its orbit. U.K.'s National Union of Journalists expressed concern at the time of the decision in 2020 to leave the rota, stating that as the royal family is partially funded by the public, "we cannot have a situation where journalists writing about the Duke and Duchess of Sussex can only do so if they have the royal seal of approval," according to Town and Country.

And although their separation from The Firm — and the rota — means no more income from the sovereign grant or the Duchy of Cornwall, the two should be just fine. In stepping back from their royal duties, Harry and Meghan (as they'd now like to be called) are allowed to earn a living on their own. The couple quickly inked a three-year podcasting deal with Spotify allegedly worth $25 million and a five-year Netflix deal, allegedly worth over $100 million. These deals will allow them to produce documentaries, films, podcasts, kids' programming and other content down the road.

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