The current spending squeeze in the UK means that there is more interest than ever, both in tools to achieve greater value, and ones that can tap new sources of finance for social goals. Different approaches to investment for social impact are likely to be tested out over the next few years. When incentives cut across long-term, preventive activity, Social Impact Bonds can play a vital role in achieving more for less. This paper builds on previous papers on the topic published by the Young Foundation since 2008, and sets out our current thinking on the concept, on SIBs potential, and some of the challenges they face. It explores how SIBs can be structured, addresses practical concerns of measurement and efficacy, and explores the areas where we expect them to be most popular. We are optimistic about the potential of SIBs and we welcome the enthusiasm they have elicited. However, so far there has been little serious analysis of the strengths and weaknesses of the SIB idea, and there is a risk that unrealistic aspirations will be projected onto the idea. Our hope is that SIBs can ‘under-promise and over-deliver’ rather than the opposite. We are working in the UK with several councils and other agencies that deliver priority social policy outcomes. This practical experience of testing the SIB concept in particular localities, using local data and taking account of particular local circumstances, has informed the analysis and research that underpins this paper.