Having participated in one of these before, experience tells that the best looking cakes are the ones which bring in the most money, so, if you have time, decorate away!
The cake auction I participated in was an upscale fundraiser for an AIDS/HIV patient support fund. It was held at a high-end hotel, and was attended in Black and White dress. I made another hat cake (see my pics) and it brought in $200.
Mine was triple lemon - lemon poppyseed cake, lemon curd filling, lemon crunch in the filling, covered with white rolled fondant, brushed with super pearl.
The more average cakes looked like something from the grab-and-go at the Wally World bakery, and only brought in between $10 and $25 each.
Do they accept coupons for auction? Our local PBS station has a fund-raising auction every year, and they gladly accept coupons for cakes. Maybe you could do a display dummy, and give a coupon for the same cake at a future date.