Maybe I have got the wrong idea about what you want to do, but it seems to me that mail merge is not necessary for what you want.
Lets say that you have a 'Form' letter that could be sent to a number of different organizations, possibly including some information specific to that organization, and of course has that organization's address and perhaps contact person's name.
As your Excel spreadsheet is selecting one organization at a time, you only need a simple set of links from the Spreadsheet to a single, standard Word Document.
In the spreadsheet have a table of organization names, addresses and other organization specific information.
The first column has the organizations 'short' name, e.g. "Council"
In the cell used for the selection say B1, use the first column of the table (organizations short names) as the source of the validation list.
B1 will now select one of the organization short names
In cells in the row above your table use the standard VLOOKUP() to return the selected organization's data.
Say the table is in cells D2 to Z20
Column D is the organization short name
Columns E to I are address fields and further columns contain other organization specific data.
In row 1 column E put this:
Drag the formula along row 1 above the address fields, changing the offset number to match.
Now Cells E1 to Z1 will contain all the information required in your form letter, depending on the short name selected in the B1 drop-down.
Open the Word document containing the Form letter.
At the point where an address field is required, go to the relevant cell on row 1 and copy it. Then in the Word document at the point you want it to appear use Paste Special..., selecting 'Paste Link' and 'Unformatted text'. The text in the cell is now linked-to and appears in the Word document.
Repeat for all required fields.
Now you use the drop-down in B1 and all the fields in the letter will change.
You don't need named ranges in Excel, and you don't need to use mail merge.
Mail merge would be used if you wanted to automatically prepare letters to all the organizations in your list in one go. In which case no drop-down is needed as all fields in the selected table are used sequentially in the series of letters.