I've done a couple of charity flights, but not the type you're talking about. In my case there were no tickets involved and no advertising of the flights, which I think makes all the difference.
Each year my club organises an event where kids from a local cancer hospital and their parents are invited along and volunteer pilots take them for rides. The club take care of the insurance and all the a/c are on Public Transport CofA anyway.
If you have the urge to do your bit for charity it might be good to organise such an event. The kids love it beyond description - I can still hear one who screamed with delight all through the takeoff and climbout! Much more satisfying for the pilot too than taking up someone who just happened to buy a lottery ticket down the pub.
I'm convinced that what we do is perfectly legal. As I say, I think it's the fact that there is a fee to pay and that there is advertising of the flight that make the other sort illegal, especially if you're talking about an auction rather than a lotterey, because the fee paid for the flight will (hopefully) be much higher.