We've always invited alum up for formal. In fact, it's one of the few events we actually get a half decent alum turn out for. Of course, we don't have a house and are the only women's fraternity on campus (and there's only one male GLO), which makes an open formal even more important.
Still, it's become a great tradition. This year we're having it in the Holiday Inn so that alum don't have to worry about finding accomodation. I've been alum for three years and would never think of missing formal. It's the only time I really get to dress up any more. Chapter presents awards, so I always like to see who won the awards I got when I was active, and they also present an alum award, so I like to see who gets that one too.