Banjo the Clown is a deity created by Elan. Banjo is nothing more than a clown hand puppet that Elan created while the Order of the Stick was exploring the Dungeon of Dorukan and Durkon Thundershield had gone missing so that Elan might be able to provide clerical services for the team.
Elan ends up using it to create small examples of divine power (because any god in D&D gets power based on the number of its worshipers). Elan tried to get the members of the Order of the Stick to join the "Church of Banjo", so Banjo could smite Roy Greenhilt, an "unbeliever". The Church of Banjo was quickly abandoned after Haley Starshine and Belkar Bitterleaf, the only worshipers other than Elan himself, lost interest and Durkon returned, causing Elan to state that although Banjo may be currently forgotten, he would later rise as a more evil incarnation: Banjulhu!
Banjo (actually Elan speaking for Banjo) later attempted to join the Asgardian Pantheon, who were apparently giving his application serious consideration. However, "Banjo" was put off by the attitude of their clerics and abandoned this effort, disappointing Odin, who stated that he likes puppets.
Banjo had only had a handful of worshipers, primarily Elan, and thus his powers were limited; however eventually Banjo gained the following of an island tribe of orcs. Those orcs now worship Banjo's brother, Giggles the Clown, god of slap-stick, also created by Elan. As Banjo and Giggles are meant to be equally powerful rivals, these orc worshipers may increase the power of both puppet "gods".