Some local governments solicit voluntary Payments in Lieu of Taxes (PILOTs) from nonprofit organizations. PILOTs are intended to substitute for property and other taxes nonprofit entities do not pay even though they consume local government services. The diffusion of PILOTs to other jurisdictions depends in part on local government financial managers’ knowledge and perceptions. Using a mail survey of local government financial managers, this study explores factors that explain the use and solicitation of PILOTs. Jurisdictions where local government financial managers do not view administrative and political costs as greater than benefits of revenue are more likely to have and solicit PILOTs. Proximity to other jurisdictions that have a PILOT make it more likely a jurisdiction will consider soliciting a PILOT. However, perceived stakeholder support for the tax exempt status of the nonprofit sector makes a jurisdiction less likely to consider soliciting PILOTs.