The reason is, that verse has been used to white wash all kinds of sin and corruption in those same churches. Addiction, adultery, epidemic divorce, abortion, and other issues are not addressed in the name of not judging.
That is counter to what both Jesus and Paul instruct us to do in our churches.
In Matthew 18:15 – 20, Jesus explicitly tells us what to do if we find someone in our community in ANY sin. By the way that is 11 chapters after Matthew 7:1, so apparently that is not judging.
Paul in 1 Corinthians 5:1 – 13, rebukes the Corinthian believers for not forcibly dealing with one who is in an incestuous relationship. In verse 12 he distinguishes between those who do not self-identify as believers, those outside, and those who do, those inside. He says we do not judge those outside, but we do judge those inside. Paul concludes by quoting the admonition that is in several verses in Deuteronomy, “Remove the wicked man from among yourselves.”
Paul isn’t done.
In Galatians 6:1, Paul tells us, like Christ did in Matthew 18:15ff that we are to address any trespass. He adds that the purpose of all of this addressing of sin or trespass in the Body is the restoration of the believer.
The Body of Christ is supposed to be salt and light in the world. If we accept as normal behavior the same perversions and sins in which the world engages, it seems that the salt may have lost its saltiness and the dim light is hidden under a basket.
Where there is no difference there is no testimony.