That's more spot on than you give yourself credit for. Sigma Nu does have a bit of a checkered history when it comes to inclusiveness.
Looking at some of my own old posts, I don't know how I'd have dealt with this situation. My concerns (rush) would have been there, but on my campus, at the time, ACACIA had a few members come out. This garnered them a lot of negative attention. For example, my younger brother, an ATO, was quite proud of himself for taking part in a "prank" where the ATO's spraypainted rainbows onto a fence on the ACACIAs' property which turned out towards a major road. Despite that negative attention, however, ACACIA is still, as far as I know, the largest fraternity on my campus.
I think this reputation for inclusiveness gained them more pledges than they lost.
Also, as an epilogue to that little story, ATO lost its charter last year, probably due to hazing, alcohol violations, low membership, or a combination of those three things. I was pretty glad to see them go. They had been the sole reason our campus turned super dry in my second year of school (had a pledge pass out in the middle of the road, getting run over during a weekend camping trip/haze-fest).
This gets us further into a great topic that is a huge hijack. I'm sure we've discussed homosexuality in our organizations on GC over the years. Maybe it's time for an updated thread to see how progressive (in practice, not just theory) folks have become over the years.
Now, once alumni status was reached, 1 or 2 have come out of the closet. It sucks, but the way most campuses work is once you become the "gay house" you are stuck with that label and it hurts the chapter usually.
I'm sure we've discussed homosexuality in our organizations on GC over the years. Maybe it's time for an updated thread to see how progressive (in practice, not just theory) folks have become over the years. 
Hybrid Mode
