Many churches have realized that a great many tracts are vile, hate filled, un-Biblical piles of tripe that do far more harm than good. They are also associated with things which give Christians a black eye, such as the classless people who use the money tracts instead of a tip.
While that is probably all true that doesn't mean tracts are useless or should be abandoned. Tracts, good ones, are very useful and helpful things. I actually use "money tracts" and almost always have positive reactions, however I have 2 rules for these tracts:
1. Never leave it, by itself, as a tip.
2. Never give it to beggars by itself or even with cash/food
I also have 2 rules for general tract use:
1. Never force it. If they don't want it say "OK, have a nice day."
2. If left with a tip at a restaurant, leave a good tip - at least 20%. I try to avoid using the money tracts with tips at all.
To the OP: I think a part of the reason is that most churches just don't do evangelism of any kind, let alone the confrontational style that tracts are geared towards. By and large, I think we've been indoctrinated that we need to bring the lost to church and have the "professionals" tell them the gospel.