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You can and should work smarter not harder no matter how many guys you have.
By definition, any tournament that appeals to the whole campus versus just greeks is going to get more participation. It's also easier to get the word out with 30-40-50+ active motivated participants than it is 20. There's economies of scale to everything.
That 20 man chapter probably can do that one event and maybe raise a couple grand for charity. I have no complaint with that. But, how many of those events can they do per year before they burn out their members, or overwork them so they aren't making grades, or that one kind of thing becomes all they're about?
With a 40 man chapter, the minimum you're able to accomplish is double what the maximum a 20 man chapter is capable of. But the upside is higher then that. That event that stretches a 20man chapter to very limit is easy for a 40 man chapter. If it's easy, you can do more than two of them. You can do 3-4+. The synergy and economies of scale that come with having more resources (manpower, money, etc) has an exponential effect on your capability.
You can argue that a very small chapter is that way because it fills a very narrow niche and takes only exceptionally high quality members. And that such a chapter can still operate at a high level despite the above disadvantages.
Okay, sure in theory in some very narrow circumstances in a very very few locations that could be true. But, more times than not, a chapter is not historically or currently small because it operates at a high level and takes only the very best. In most cases, they're small due to competitive forces and tend not to operate consistently on a high level.
About consistency also. With a 20 man group, you're much more dependent on exceptional individual leadership and management. Those exceptional people don't come around that often, and when they do they can only transfer part of the skill set to a very limited number of also exceptional people who happen to be waiting in the wings.
The tendency of smaller groups is to be very inconsistent over the long-term. They are more likely to swing between very high and very low points in their operational effectiveness over time. By just doubling that chapter to 40, you exponentially flatten that business cycle. You double the number of effective leaders at any one time, you double the probability of exceptional leaders being present, and of exceptional leaders coming up while other exceptional leaders are there to mentor them. You double the resources available to you, which means you accomplish at least twice as much with half the risks.
I'm not going to say there is an ideal chapter size, because that's different from one place to another, but there is an extent to which bigger is in fact better. Just like there's an extent to which too big is a bad thing. A 20 man chapter when all other chapters are 50-60 is not a good thing. The correct response is strong growth.
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