Its pretty easy, really. We get some victi.. er... volunteers to be auctioned, anyone who wants to. Each person decides their "limits", if they want to be IC or OOC, and so on. Over a week, folks bid on the victi.. volunteers, and on a friday, the boards close, and the high bids win the person in question for the weekend.
We usually do something like a 50/50 split with the proceeds, half to the victi damnit, volunteer, and half to the sim for prizes, contests, and the like. Its usually a good time.
I thought about doing it a bit back, but the RFL stuff was still going on, and everyone was donating to that, for which I am happy. Better it go there. Now that that stuff has more or less wrapped up, it might be a good time. These auctions are usually a good time for people to get to know folks they haven't met yet, as well.