Why doesn't it pass the smell test? I used to do this for the scouts many years ago when my kids were in it, when they were having a fund raiser. I would donate an hours flight for up to 3 people. They would either make it a raffle prize or silent auction (up to them ) and they would state the flight was in a single engine 4 seat private aircraft so everyone knew what they were buying/bidding on. I would be advised who my passengers were days later and I would take it from there. Did it for a number of years too. The first time I did check with CASA first that it was legal and was told as long as I made no financial gain from it which I didn't it was fine as it was a private flight ( actually cost me the hours flying). I know of another chap who to this day still does the same for a cancer research fund raiser every year.
What's the issue here? I suspect it comes from some disgruntled CPL's who are struggling for work that think that is a job they could have. It isn't. If punters had to pay full tote odds for a flight with the profit going to a commercial enterprise they would't buy it. So no one benefits.