A “bake sale” is usually held by a non-profit organization (such as a school or a church) to raise money. Various (usually) home-made baked goods are offered for sale, such as doughnuts, cupcakes, cookies and cakes. The term “baking sale” has been cited in print since at least May 1891; “bake sale” has been cited in print since at least September 1902.
 
The saying “It will be a great day when our schools get all the money they need and the air force has to hold a bake sale to buy a bomber” has been in use in various forms since at least 1973.
 
       
Wikipedia: Bake sale
A bake sale is a fundraising activity where baked goods such as doughnuts, cupcakes and cookies, sometimes along with ethnic foods, are sold. Bake sales are usually held by small, non-profit organizations, such as clubs, school groups and charitable organizations. Bake sales are often set up around an area of pedestrian traffic, such as outside a grocery store or at a busy intersection near a mall.
 
A major selling point of bake sales is the supposed and often advertised homemade nature of the goods being offered, but with the proliferation of prepared cookie dough and boxed muffins and cupcakes, this claim has become increasingly dubious.
 
Free Merriam-Webster Dictionary
bake sale noun
Definition of BAKE SALE
: a fund-raising event at which usually homemade foods (as cakes and cookies) are sold
First Known Use of BAKE SALE
1903
 
(Oxford English Dictionary)
bake sale n. orig. N. Amer. a sale of donated (and usually home-made) baked goods, held as a fundraising event.
1902 Post-Standard (Syracuse, N.Y.) 21 Sept. 14/2   The ladies of the Baptist Church held a *bake sale.
1949 N. Jones For Goodness’ Sake 60   You then speak of the Bake Sale the previous Saturday and grow lyrical about the home-made bread offered there.
   
Chronicling America
24 May 1891, St. Paul (MN) Daily Globe, pg. 10, col. 3:
The ladies of the church (Methodist—ed.) will this week Saturday start a Saturday baking sale in the store adjoining the postoffice.
 
Chronicling America
31 May 1891, St. Paul (MN) Daily Globe, pg. 11, col. 2:
The first of the “Saturday Baking Sales” by the Methodist ladies occurred yesterday in the room next to the postoffice. It was a success and thoroughly practical. Let them continue through the summer months. 
 
Chronicling America
27 October 1895, St. Paul (MN) Daily Globe, pg. 19, col. 7:
The ladies of the Congregational church will hold a baking sale from 3 to 4 Friday afternoon in the church parlors.
 
Chronicling America
19 March 1899, St. Paul (MN) Daily Globe, pg. 20, col. 6:
The ladies of St. Matthew’s church will hold a baking sale and sale of fancy articles Saturday, April 1, at the home of Mrs. Walter Hill.
     
14 June 1901, Bridgeton (NJ) Evening News, pg. 3, col. 5:
THE SALE POSTPONED.
The home-made baking sale, which was to have been held by the ladies of the Episcopal church on Saturday of the present week, has been postponed to Saturday afternoon, June 22nd, in the choir-room of the church.
 
21 November 1903, Jackson (MI) Citizen Patriot, “Albion,” pg. 6:
On Nov. 28 the Daughters of the King will hold a bake sale at the grocery store of Mr. Rodenbach.
 
26 May 1904, Evening News (Sault Ste. Marie, MI), pg. 3, col. 4:
The Presbyterian ladies will hold a bake sale at Gowan & Pickford’s store on Saturday from 2 to 6 o’clock.