Try each of the following steps in order until the issue is resolved:

1. Exit Microsoft Outlook
2. Reboot the workstation to ensure all WINWORD.EXE processes are closed.
3. Create and merge the gift letter(s).
4. Re-open Outlook.
5. Configure Microsoft Outlook not to use Microsoft Word as the default editor.

If additional assistance is needed with this issue, refer to
How to troubleshoot problems that occur when you start or use Word 2003 or Word 2002 on Microsoft's website.
Note: We provide links to third-party websites in an effort to help you resolve your issue. We are not responsible for the information on third-party websites, and we cannot assist in implementing the solutions on these websites.