The state is facing turbulent times. Financial and economic turmoil, growing inequalities, disinvestment in public and social services, and political disenchantment are but a few problems that contemporary society is facing, while traditional policies are failing to deliver the desired results. Social innovation is a possible approach to deal with emergent social needs. Research and policy experimentation on social innovation increased in the last decade, but many questions remain open. One key interrogation regards the relation of social innovation with the state. How can the state, considering the multi-level interactions that necessarily exist between different stakeholders, promote these practices? Using the case of Portugal, and the recent implementation of a pioneer public programmed dedicated to social innovation—Portugal Social Innovation—, this article contributes to the understanding of the role the state in the promotion of social innovation and the challenges, tensions, and difficulties experienced by those involved in the sector, whether as practitioners of social innovation or as heads of public institutions responsible for assisting in the development and implementation of social innovations. The article presents data gathered from a focus group involving the representatives from key third sector associations and officials responsible for public institutions that support the implementation of social innovation at the relevant levels of government (national, regional, local). Results show opportunities and tensions between the third sector and the different levels of the state, and a difficulty to adapt the processes and practices of public administration to the dynamic and creative nature of social innovation.