The act itself doesn't do squat, beyond drawing attention to the participant. It's the verbal request from that participant to donate before or after the act, coupled with the nomination of others, compelling those nominees to do the same and essentially causing a gradual signal boost.
On one hand, it's effective because people don't want to be "that asshole" who doesn't go through with it. It's essentially a guilt trip that forces the challenge's spread. On the other, it risks falling flat on its arse when people can't even get the verbal part right. Someone I know did it and asked people to donate, but completely failed to specify the charity.