Cause GIFTS and Essential GIFTS systems with the Correspondence option connect with external email programs to send email messages to Contacts with Internet addresses, as well as contacts that are part of your internal email system.
This error usually occurs because the link between GIFTS and your email system has not been set up properly. 
  1. Open the Administrator Module
  2. Select Setup>Preferences>External
  3. Verify that the E-mail Program Used is properly configured to match your systems configuration