I love testimonials because they are real people speaking in their own voice about why they like your organization and its work. It is one thing to hear from an employee about the work they do or what they have accomplished, but it is almost always more powerful to have a person who is not an employee speaking from their heart. It also provides an opportunity to showcase the diversity of supporters and stakeholders that like the organization. People don't just relate to concepts - people relate to people.
I often use the example of having someone with a digital camera that records video go around at an event and ask volunteers, board members and even donors "why do you donate your time/money to this organization?" "what do you love about this organization" . Once collected, these testimonials can be uploaded to YouTube and integrated in a variety of ways to your online presence.
Last November Nancy Schwartz on her Getting Attention! blog, posted a great article "The Most Powerful Marketing Copy in the World - Testimonials" which provides examples, gives advice on getting testimonials and in part 2 of the article gives her "Seven Steps to Compelling Testimonials".
Here are some video examples I have run across lately from both small and large organizations using testimonials in various ways:
Autism Speaks: On YouTube
Duke University: Video about annual giving on their website
Texas Organ Sharing Alliance: On YouTube
Even the smallest organizations can benefit from using these in their marketing materials and in their online presence. They can even be included in social media plans, uploaded to YouTube or Facebook, linked to from Twitter, etc. I encourage all nonprofit organizations to read Nancy's articles and work on collecting testimonials. It is an effective and inexpensive way to augment your marketing and online presence.