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Interesting situation - I don't think "declining numbers" are the problem - but they are definitely a symptom of something bigger getting in the way of your chapter achieving success.
Like others have posted, I would also draw "a line in the sand" - sounds like with the recent history of the chapter, the sisters are used to "keeping things the way they are" by running out those who are trying to help. Now is the time to give that help, whether or not they believe it is needed.
I would confront them with the facts - numbers are declining - hazing might be going on (and "the other chapters do it, so we have to" is the DUMBEST excuse I've ever heard for having to do it - this might just be the chance to show the excellence of this chapter - that new members WILL be treated with respect - in direct contrast to the others - if they still balk, tell them "then let's be honest and put 'we'll beat the snot out of you worse than any other chapter' on our rush posters and shirts" - and see what kind of new members you get). Alumni/undergrad relations are non-existent or hostile at best, which is always a recipe for disaster in the short term.
Either they agree to start addressing the problems and confronting them head on to change the chapter into what it CAN be, or they need to choose deactivation. Worst-case: do it for them with a membership review or whatever process exists for your GLO.
You need to stress the urgency of the situation - either they help change things now or they won't be part of the sisterhood in the future - either the chapter will have to make drastic changes or fold.
You could do what one CA for LXA did one time - he was so disgusted by what he found in a surprise visit to the chapter house that he personally took the charter off the wall - and would not return it until things changed, and he had a long list of changes, that mirrored everything the HQ of the fraternity had been telling them for a long time. They started to make some changes, but, unfortunately it was too little, too late, and some of their two-year old "traditions" were too dear to part with, and the chapter was eventually closed. That was my chapter.
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