Campaigners have reported Prince Harry and Meghan Markle's Sussex Royal charity for "conflicts of interest, inappropriate use of funds and a lack of independence".
Anti-royal campaign group Republic flagged both Sussex Royal and The Royal Foundation - the Duke and Duchess of Cambridge's organisation - to the Charity Commission.
The group alleges that funds have been transferred from one group to another and "the only rationale for the decision was the personal relationship between two patrons, the Duke of Sussex and the Duke of Cambridge".
They claim The Royal Foundation gave £145,000 ($279,134) as a grant to Sussex Royal and £144,901 ($278,943) to Travalyst - the Prince's eco-tourism scheme.
The Royal Foundation was formed in 2009 as a vessel for both Prince Harry and Prince William to pursue their charitable aims.
The Duke and Duchess of Sussex's own now-defunct charity formed after they split their household from that of the Duke and Duchess of Cambridge in 2019.
Republic CEO Graham Smith wrote in a letter to the Charity Commission: "I am writing to lodge a formal complaint against the Royal Foundation (Charity no. 1132048) and Sussex Royal (Charity no. 1185074).
"These two charities appear to be in breach of guidelines regarding the proper use of charitable funds and may be failing in their duty to act independently and solely in the interests of their objectives.
"The Royal Foundation gave a grant of £145,000 to Sussex Royal and £144,901 to a noncharitable organisation [Travalyst]. In both instances it appears the only rationale for the decision was the personal relationship between two patrons, the Duke of Sussex and the Duke of Cambridge.
"Neither patrons are trustees of the Royal Foundation, so there is also a question mark over the independence of the trustees of the Royal Foundation.
"The Sussex Royal charity has since decided to close, and it is reported that they will transfer all their funds to Travalyst.
"Again, this appears to be a personal decision by a trustee [the Duke of Sussex] to fund another of his projects, rather than to ensure the funds are being used for the original purposes for which they were donated.
"I would argue that these grants fall within the definition of 'a person or organisation receiving significant financial benefit from a charity' and/or 'a charity not following the law, with damaging consequences to its reputation and public trust in charities generally'."
The decision to transfer funds from The Royal Foundation to Sussex Royal was taken by the former's board of trustees.
Speaking today, he said: "Maybe I'm missing something here, but I find it difficult to believe that a charity making an independent and impartial decision would decide to make these payments.
"The Royal Foundation has lost almost £300,000 to Prince Harry's pet projects. Harry's own charity is now closing and he appears to be taking the charity's money with him. I can't see how that isn't a breach of charity law.
"Whatever the legal position this looks unethical and underhand. People donate money to a charity expecting it to be used to fund the charity's objectives, not to be given away to support a patron's other projects.
"Harry and William aren't trustees of the Royal Foundation, so this also raises questions for the Foundation's board. Are they focused on delivering the charity's objectives or serving the princes' interests?
"I'm asking the Charity Commission to investigate these two charities, to ask them to provide justification for these payments and to demonstrate that they are not in thrall to their royal patrons."
Harry and Meghan filed official paperwork with Companies House to dissolve their royal foundation in July as they shift their focus to Travalyst, reports suggest.
The company - which has been set up independently - hopes to help the hard-hit tourism industry survive the coronavirus crisis.
A Royal Foundation spokesperson said: "The grants made to Sussex Royal were to support the charitable work of the Duke and Duchess of Sussex. They were fully in line with governance requirements and were reported transparently."
A Charity Commission spokeswoman said: "We have received a complaint on this issue.
"As with all concerns raised with us we will assess the information provided to determine whether or not there is a role for the Commission.
"We have not made any determination of wrongdoing."
A spokesman for the Duke of Sussex's legal team said the complaint against his charitable foundations was "deeply offensive" and "salaciously created".
The Schillings spokesman said: "The Duke of Sussex has always and continues to remain deeply committed to his charitable work. This is his life's focus, and his devotion to charity is at the very core of the principles he lives by, and is obvious through the impact and success of his many charitable projects throughout the UK and beyond.
"To this point, it is deeply offensive to today see false claims made about the Duke of Sussex and his charitable work. It is both defamatory and insulting to all the outstanding organisations and people he has partnered with."