According to the right seat pilot/owner of the tailwheel-equipped airplane, she was demonstrating a short field takeoff to the passenger on a grass area adjacent to the airport’s single paved runway. After adding power and releasing the brakes, the airplane veered to the left toward a ditch between the grass area and the paved runway. The pilot attempted to steer away from the ditch by applying rudder control inputs but was unsuccessful. As the airplane approached the ditch she elected to rotate. The airplane briefly became airborne then stalled and impacted terrain. The pilot and the passenger were seriously injured and the airplane’s fuselage and both wings were substantially damaged. The pilot reported that there were no preimpact mechanical failures or malfunctions with the airplane that would have precluded normal operation.