Setting up an auction can be labor-intensive and time-consuming. Have a goal in terms of how much you want to make and for what purpose the money will be used. You will most likely have to spend something to make the auction so don't forget to include that amount when making your plans. Having a goal is important at this stage since very young children are rarely amazing artists, which means you run the risk of only their parents buying their art. To convince people to buy the art, give them a good reason to do so.
Young children tend to get attached to their art so have a good, simple reason to explain the concept of the auction to your students. If a child is attached to a piece, let them make a new one just for the auction to avoid untimely tears. Let your students know why their art is being sold. At this early age, recognition does not mean much to children so use a tangible reason. For example, "We don't have money for art supplies so your art will help us buy new supplies" or "Dawn is sick and her parents need money to take care of her so we are going to help" are good reasons. Kids like to feel useful and be helpful so most will be content with this type of explanation.
While the children's parents are the most obvious group to invite, they shouldn't be the only ones considered. The extent of your options depends on the reason for the auction. More people will come to an auction in support after a tragedy or to help pay for medical costs. You can inform people about the auction using local newspaper and TV stations and by sending personal invitations. If the auction is just for fun though, you may want to limit it to students and their families. People you can invite include the school board, the school's teachers, family and locals known for donating to needy institutions.
Even a kiddie auction requires basic refreshments such as punch, soda, cookies and chips. Grownups probably prefer cheese platters and bite-size fruits and veggies, possibly with wine (although most states do not allow alcohol on school property) or punch. Music might help little auction-goers burn off energy by dancing. Decorations can be made by the children. If your budget does not extend far enough to do this on your own, consider approaching a local caterer and florist. Many would love a chance to have tons of parents commenting on their tasty food or beautiful flowers but you will probably have to leave their cards on the refreshment table and thank them publicly.