I remembering talking to some Phi Chi's at the Local Sorority Convention last summer, and they gave a run down of the campus culture. It definitely seems like a positive gesture on the part of the Panhellenic council to offer you the option of participating in Formal Recruitment.
Getting into the Formal Recruitment fray could be a big advantage to your chapter. While you will get those girls who 'know' they don't want to join your chapter, but you'll get to meet plenty of girls who wouldn't have met you otherwise.
There are plenty of ways to get around having a small chapter. Something that my chapter did a few years back was get as many alumnae as possible to come and help the day of. They were dressed the same as the active chapter. They helped with food and floated around the room. It made our chapter seem larger, and lessened the burden on the actives. If you have the option, choose small-she spaces to hold your parties - a smaller room will seem 'fuller'.
However, Formal Recruitment is a beast. My chapter was really lucky, a friend of one of our sisters had been a traveling consultant for Sigma Kappa. She came and whipped us into shape for formal recruitment. If your panhel is really in suppport perhaps they could arrange a tutorial for your chapter on FR basics - bumping, conversation topics, decorating on a budget - by members of chapters.
Know the rules and what your getting yourself into. Get a copy of your campus' formal recruitment guidelines and possibly pertinent Unanimous Agreements.
FYI - There is going to be a special breakout session at the LSC about formal recruitment and how to be competitive. Hopefully Phi Chi will be sending representatives again this year.
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