The relationship between the BBCWS and the FCO is governed by two documents, the Broadcasting Agreement and the Financial Memorandum

The BBC's UK radio and TV services are financed by the television Licence Fee (all owners of television sets in the UK are required to buy an annual licence). The BBC also earns extra income through the sale of programmes overseas and of books, videos, tapes and other products linked to BBC programmes.
BBC World Service does not receive any funding from the UK Licence Fee.

The BBC Charter
The BBC, including World Serivce, operates under two constitutional documents - its Royal Charter and the Licence and Agreement. The Charter gives the Corporation legal existence, sets out its objectives and constitution, and also deals with such matters as advisory bodies.

Under the Royal Charter, BBC must obtain a licence from the Home Secretary. The Licence, which is coupled with an Agreement between the Minister and the Corporation, lays down the terms and conditions under which BBC is allowed to broadcast. There are also important clauses relating to finance and to programmes.

There is a relatively small number of things which BBC must not do. For example, it must not carry advertising, neither can it express its own editorial opinion about current affairs or matters of public policy, other than broadcasting. That is not to say, of course, that controversial programmes are never broadcast, but great care is taken to ensure that arguments are well balanced.