Maybe a simple block like a 9-patch mug rug or other simple bock (check out Quilt Blocks Galore at Quilterscache.com) one where you sandwich the three layers then bind it..or, one where you put right sides together, sew around all sides leaving room to turn it right sides out. Then sew around the outside after turning.

Whatever you chose, maybe think of making a sample to show what that person would be making. I love mug rugs..my friend made one for me, and every morning when I put my cuppa on it, I think of her!

One thing they taught at my quilt guild was making a large 9 patch rag baby quilt. It can be completed except for the final cutting on the seams in three hours. Another project is a three piece pillowcase. You will include cutting measuring and color coordination in these two.

Just a thought.

I would do a D9P for the pillow front/warm wishes and maybe a rail fence for the back. This would teach cutting, 1/4 inch seams, and simple matching of seams.

I think if you're going to have a 3 hour time, you should be able to tailor the class to the needs of the winner. If someone is learning color theory is a bit much for some people (I'm one, but I know how it works and I have dropped classes when they got too into it for me - that's just me). If you can have a couple of choices, this will be more of a draw to more people. You could make up a pillowcase (and a pillowcase kit), this would be able to show what you are bidding on and how it will look after the class. Or you could do the same with a set of two placemats (show a finished one and the kit for the other two), you can make one in class and they can go home and make the second one. These are the kinds of things I would offer, just remember you should be able to show a finished example at the auction (people like to see what they are bidding on). Good luck

How about one of those Quilt in a Day log cabins? That is a really fun day and I love log cabins. It would seem to me that a booklet and instruction would be a good selling/bidding attraction.

Why not just stick with a mug rug for a 3 hour class? Let the person choose his/her fabric and do straight line quilting or put painters tape on and demonstrate how we use everyday other tools to quilt.

we do a 3 hour beginner class and do a churn dash block. It allows them to work on several things and play with their 1/4" seams. They can trim the outside to get it 'even' and either use it on a pillow or attach it to a basic tote bag. I like to give them a one page sheet with some basic info that they can refer to later at home. remember you are giving them a lot of info at once. We found that the churn dash is basic enough but complex enough that they can get it done in 3 hours and feel real good about themselves. Be sure and offer them additional lessons (great side source of income!!)

Another great idea! Thank you.

I would recommend teaching the "Disappearing 9 Patch" pattern. First thing is...both of you together watch Jenny Doan's YouTube on that title...that will be a good introduction to a quilt block and he/she can learn the process quicker this way. Have a charm pack ready to work with.
Hope you get a good amount for the fundraiser! I donated a new finished quilt to my church's fundraiser auction. I don't know who got it nor how much it sold for. There were 24 tables of items, and each was assigned a number...and you could write the amount of your bid on a provided sheet of paper on the table. Silent auction for that type, other types available too.