Utilize "National ----- Month/Day" and partner with an existing entity that can help provide a space. Terry is spot-on about that. That way you wouldn't have to worry about location overhead. It also pools both groups' resources/followings to maximize donation cash.
Formulate a goal with a cause and figure out what you want to do.
Then with all that in mind, figure out a budget and work from there to get the best quality in advertising and equipment (if necessary); much of capital could be gained through sponsorship proposals. Lots of companies out there would be more than happy to give money to a non profit for tax purposes. You'd be surprised at who gives.
Figure out good times prior to the event to begin advertising through posters and print ads. In my experience, however, newspaper print ads aren't really effective unless you're paying a LOT. However, local radio and TV stations are willing as long as you're able to get past the intern/screener. It never hurts to court the free advertising. Heck, radio stations are supposed to advert PSAs (especially for non profits). It'll be at odd times, but hey, free is free.
Using the internet is key. Creating a buzz without spamming people is pretty easy, but persistence and an upbeat attitude are essential. This is for the kids.
Another thing... people coming to this event need something to bring back home... T-shirts are always a good thing. That way you can place your sponsors on the back... as well as any promotional goods you've put up for the event.
I digress.... PM me to brainstorm if you'd like. I love doing events like this. I can explain more as well. This has worked for me in a number of fundraisers that include bike rides, animal rescue fund raisers, Toys for Tots, bake sales, concerts, etc. I haven't attempted to get a carnival, but with proper planning and a positive outlook on the situation, your goal will be met.
The more creative the event, the better. And once you're done, there's always next year to improve.
I know I've been all over the board with this, but once it's down on paper, it's all about the KISS method, and a "can-do" perspective.
There's also looking for grant funds for this. Urban Future, a non profit in my city looks for these as well. They also work with underpriveliged kids.
Keep up the great work. Children need positive support in their lives.